Data-Driven Analysis of “Corporate Risk” Using Historical Cost-Control Data
Publication: Journal of Construction Engineering and Management
Volume 124, Issue 1
Abstract
The process of risk management includes three phases of risk identification, risk quantification, and risk control. Of the three phases, many managers agree that the major benefits of risk management are derived from the insights through the way project risk is identified. The approach for managing project risks may be broken down into two ways. One way is to analyze risks by those unique characteristics associated with individual projects, and implement project strategies by a single project. Another approach may be to classify risks into similar groups, those that exist simultaneously and routinely in a portfolio of company's projects, and adopt corporate strategies across projects. This paper is concerned with the second approach. This research postulates that there exist some covariable risks, or corporate risk, among a company's project portfolio, and maintains the hypothesis that such risks could be diminished efficiently using strategies made at the higher levels of corporate management rather than strategies at the project level. While most managers may acknowledge this assertion, they often lack a useful tool by which to analyze risk at issue. As a result, the major goal of this paper is to provide managers with a theoretical framework of risk analysis methodology that will support analyzing a project's risks from their company's point of view.
Get full access to this article
View all available purchase options and get full access to this article.
References
1.
Carr, R. I.(1982). “General bidding model.”J. Constr. Div., ASCE, 108(4), 639–650.
2.
Construction Industry Institute (CII). (1987). “Work packaging for project control.”Publication 6-6, Univ. of Texas at Austin, Austin, Tex.
3.
Construction Industry Institute (CII). (1988). “Incentive plans: design & application consideration.”Publication 5-2, Univ. of Texas at Austin, Austin, Tex.
4.
Construction Industry Institute (CII). (1989). “Impact of risk allocation and equity in construction contracts.”Source Document 44, Univ. of Texas at Austin, Austin, Tex.
5.
Haugen, R. A. (1990). Modern investment theory. Prentice-Hall, Inc., Englewood Cliffs, N.J.
6.
Levitt, R. E., Ashley, D. B., and Logcher, R. D.(1980). “Allocating risk and incentive in construction.”J. Constr. Div., ASCE, 106(3), 297–305.
7.
Minato, T. (1994). “A methodology for project risk control: a work package-based approach using historical cost-control data,” PhD thesis, Dept. of Civ. Engrg., Univ. of California, Berkeley, Calif.
8.
Vergara, A. J. (1977). “Probabilistic estimating and applications of portfolio theory in construction,” PhD thesis, Dept. of Civ. Engrg., Univ. of Illinois, Urbana-Champaign, Ill.
9.
Watson, G. H. (1993). Strategic benchmarking. John Wiley & Sons, Inc., New York, N.Y.
Information & Authors
Information
Published In
Copyright
Copyright © 1998 American Society of Civil Engineers.
History
Published online: Jan 1, 1998
Published in print: Jan 1998
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.